By Bhanvi Satija and Manas Mishra
(Reuters) -Walgreens Boots Alliance Inc kept its 2022 earnings forecast unchanged even as it beat estimates for second-quarter results, sending the drugstore chain’s shares down 7% on fears of slower-than-expected growth for the rest of the year.
An Omicron-led surge in COVID-19 cases during the second quarter had boosted demand for vaccines and testing at Walgreens. But testing has slowed since January, Walgreens executives said, adding it remains a steady source of business as travel resumes.
Despite the rise of the highly transmissible Omicron sub-variant BA.2, health experts in the United States believe a new wave of infections appears unlikely as overall cases are declining from January’s record highs.
Walgreens expects low-single digit growth in profit for 2022, implying it would earn between $1.69 and $1.79 per share in the second half of the year versus consensus estimates of $1.97, according to Evercore ISI.
The company said its cautious forecast was due to increasing investments in its Walgreens Health unit, which it created earlier in fiscal year 2022.
“These new investments, paired with tough sales and profit comparisons from last year’s COVID-19 activities, could keep sales and profit growth muted for a while, assuming no pandemic resurgence,” said Edward Jones analyst John Boylan.
Walgreens has forecast 30 million vaccinations this year at its sites. In the second quarter ended Feb. 28, it administered about 11.8 million doses of vaccine and sold 6.6 million tests.
Total sales rose 3% to $33.77 billion in the quarter, beating estimates of $33.40 billion.
Excluding items, the company earned $1.59 per share, compared with Refinitiv IBES estimates of $1.40.
Walgreens said the strategic review of its UK-based Boots business, which began in January this year, was progressing well and it would pursue outcomes that potentially maximize value.
Shares of the Dow component fell 6.9% to $44.17 in early trading.
(Reporting by Bhanvi Satija and Manas Mishra in Bengaluru; Editing by Shinjini Ganguli)